AWPA Wireline - March 2004

There have been several developments with respect to the Continued Dumping and Subsidy Act (CDSOA, otherwise known as the "Byrd Amendment").

Our Trading Partners

On January 15, the EU asked to impose retaliatory tariffs on US products because the US did not abide by the WTO ruling. The WTO Dispute Settlement Panel found that the amendment allowing the distribution of antidumping and countervailing duties to companies that petition for import relief violated WTO rules. The failure of Congress to repeal it led the European Union to seek authorization to retaliate. Brazil, Canada, Chile, India, Japan, Korea and Mexico have joined the EU in seeking authority to retaliate.

Before the authority can be given, however, the complainant countries must prove that the rule violations placed a measurable financial burden on their exports. The EU maintains that the level of tariff retaliation should be commensurate with the distribution of the duties to the US companies.

The US objected to the retaliation concession, arguing that they failed to specify a level of retaliation. Therefore, their request to retaliate was referred to "arbitration" - meaning a panel of judges will decide whether these countries can retaliate in about a month. The Senate will likely wait until it is known what level of retaliation will be suggested before deciding what to do about the amendment. This is expected later this month or in early April.

EU officials have indicated that they will seek retaliation up to $64 million, the amount of antidumping and countervailing duties collected on European imports in 2002. Japan is estimating they will seek $100 million, but is also expected to reserve its right to retaliate, particularly in light of increased trade tensions with Washington over Japan's ban on imports of US beef following the first reported case of mad cow disease in the US.

Congress

The House Ways and Means Chairman Bill Thomas (R-CA) asked the Congressional Budget Office to do a short study on the provision. One of the issues CBO explored; the distortions in the market caused by Byrd, (i.e., putting domestic non-recipient competitors at a disadvantage).

Among the conclusions: The Byrd Amendment provides incentives for US businesses to pursue more antidumping and subsidy complaints. It also discourages settlement of cases by US firms and will lead to increased expenditures of economic resources on administration, legal representation of parties, and various other costs associated with the operation of the antidumping and countervailing duty laws. To the extent that other countries adopt comparable policies, the law may lead to further interference in the ability of US exporters to compete in the global trading system.

The CBO also projects that distributions from this provision would total $3.85 billion from 2005 through 2014.

However, the FY04 Omnibus Appropriations bill sent to the president for signature included a provision by Senate Appropriations ranking member Robert Byrd (D-WV) directing the president to seek to negotiate his way out of the WTO decision against the Byrd Amendment.

Following this action, eight Senators (Mike DeWine-OH. Robert Byrd-WV; Larry Craig-ID; John Rockefeller-WV; Rick Santorum-PA; Tom Daschle-SD; Arlen Specter-PA; and Blanche Lincoln-AR) sent a "Dear Colleague" letter to other Senators about this provision. The letter also suggests that threats by trading partners to retaliate should be of no concern as the level of retaliation "will likely be minimal and probably non-existent."

The letter ends with a request for other Senators to join the eight in "expressing strong support" for the Byrd Amendment to President Bush.

The Administration

The President's proposed budget for the Treasury Department indirectly repealed the Byrd Amendment. It stated: "The Administration proposes repeal of this provision." It also notes that the distributions "provide a significant additional benefit to producers that already gain protection from the increased import prices provided by the tariffs." The Administration is projecting the fund to amount to $885 million in fiscal year 2005.

Disbursements under Byrd so far totaled $231 million in fiscal year 2001 and $330 million in 2002. Figures for 2003 are not available yet.